Loopring (LRC)
Basics * DEX * A protocol and decentralized automated execution system utilizing zkSNARKs to bring 'highly scalable', non-custodial trading. It trades across the crypto-token exchanges, shielding users from counter-party risk and reducing the cost of trading. * As their CEO once stated (9-2019) in an AMA: "I used to have a CEX called coinport. So I know all the frustrations a CEX owner has. I wanted to create a solution for myself and ended up with a whitepaper and an ICO. But the latest version is based on Vitalik’s ZK Rollup idea." * As of late 2019 only for Ethereum ERC-20 tokens. * From EthHub #91 (9-12-2019): "Loopring v3-beta4 has been deployed to the Ethereum mainnet. Even though this version is called a “beta”, the team believes that it’s production-ready. * From their Telegram channel:'' There was an older version of the Loopring token which is now deprecated / useless. All old LRC holders automatically got the new, upgraded token in their wallet May 2019.'' * Team Loopring have released (7-2019) v3 of their protocol, designed to address DEX scalability with the use of zero-knowledge proofs (we've recently seen Starkware releasing a design for this called Starkdex, using STARKs rather than SNARKs). Almost all data and computations are moved off-chain, with only the Merkle tree root being stored on-chain. The team claims it can scale 660 trades/sec without on-chain data availability at the cost of <$0.01 per trade. Loopring Protocol Trusted Setup Participants From their website (as of 1-2020): * Brecht Devos / Loopring * Steve Guo / Loopring * Koh Wei Jie / Ethereum Foundation * Anton Buenavista / Kyber Network * Garrett MacDonald / Tuku * Vany Serezhkin / INSOLAR * Francois Proulx / dfuse * Guo Yu / SECBIT Labs * Daniel Wang / Loopring * Felix Leupold / Gnosis * Arnaud Schenk / AZTEC Protocol * Manuel Garcia / Protofire * Chris Wessels / Consensys * James Prestwich / Summa * Li Weichao / VITE Labs Token * Whitepaper (8-9-2018) can be found here. * From the above mentioned whitepaper: "LRx is our generalized token notation. LRC is the Loopring token on Ethereum, LRQ on Qtum, and LRN on NEO, etc. Other LRx types will be introduced in the future as Loopring is deployed on other public blockchains... LRx tokens have a fixed supply, and in the cas of LRC, certain percentages are frozen from the Loopring Foundation, and allocated to community-purposed funds [21]." * For now (9-2019) the token is used for staking: "LRC is now used as a stakable token. It can be staked by anyone to earn part of the protocol fees on the network, and is also staked by DEXs for extra economic security guarantees." * Token will be used (9-2018) for fee's and governance. "Smart contract updates will, in part, be governed by token holders to ensure continuity and safety, and to attenuate the risks of siphoned liquidity through incompatibility." * From their 2020 roadmap blog (17-12-2019): "Of Loopring’s protocol fee: * 70% will be rewarded to LRC stakers; * 20% will go to the Loopring DAO (to be built); * 10% will be burned. Until our DAO is live, the 20% allotted for it will either go to LRC stakers or be burned. Our expectation is to burn 10 to 25 million LRC by the end of 2020. In addition to staking for the protocol fee distribution, LRC is also used by DEX owners as a bond for economic security. The locked LRC is partially or completely slashed when a DEX violates protocol rules, such as failing to submit a proof for a committed block on time, or having a reversion. Note, this economic security is only ‘in play’ until the zkSNARKs are submitted, which provides final, cryptographic proof. '' ''The amount of staked LRC thus reflects a DEX’s likelihood or disincentive to violating protocol rules. The more LRC locked, the more reliable a DEX should be. Similarly to how this signal informs users, it also informs Loopring in terms of which teams / DEXes are making the most significant commitment to the ecosystem — leading us to be more inclined to support DEXes that lock substantial LRC. This support comes in the sense of potential ecosystem grants (LEAF), and willingness to support their DEX with Lightcone relayer, among other technical assistance. '' ''The final type of LRC staking is for lowering the protocol fees on a specific DEX. This LRC would be staked by exchange owners, market makers and high-frequency traders, to realize reduced protocol fees on said venue. While it is exchange owners who need to pay protocol fees for all orders to settle, other stakeholders/users of a DEX would be incentivized to stake there if it meant protocol fee reduction was passed through via lower trading fees. We envision that via staking types 2 & 3, exchanges and market makers will lock in no less than 50 million LRC by the end of 2020." * From this blog (31-7-2019): "LRC is becoming a stake-able token, to be used in 3 types of staking: # Anyone can stake LRC to earn part of 70% of the protocol fees of all exchanges built on top of Loopring. (20% will fund the Loopring DAO and the remaining 10% will be burned). # An exchange owner needs to stake LRC for economic security & reputation. # LRC can be staked to lower the protocol fees on a specific exchange by an exchange owner, market makers and high-frequency traders. There is the introduction of a protocol fee. The protocol fee is applied proportionally on any token transferred in a trade over the Loopring protocol. This means that each leg of a trade — across all exchanges built using the protocol — pays the (small) protocol fee. The protocol fee can be configured to be any percentage from 0.001% up to 0.255%, in increments of 0.001% (0.1 bps). This fee is completely abstracted from the end-user (trader). A trader just pays ‘regular’ trading fees, specified by the DEX they are on. The DEX is the party who pays the protocol fee. Thus, these are totally decoupled, and the trading fees may even be smaller than the protocol fees. Fees don’t need to be paid in LRC, and there is, in fact, no benefit to paying fees in LRC. The protocol fee is applied to the token being bought, on the amount bought. As such, while clearly important to the protocol, the protocol fee is itself quite detached from the intrinsic value of LRC. You can read more about the fee model and see examples in depth here, but just note it has the following properties: * A different protocol fee can be used for maker orders and taker orders. * Rebates (negative fees) can be given to incentivize trading (to market makers). * Traders pay fees in tokenB, the token they are buying. * The maximum trading fee a DEX can charge is 0.63%. * DEXs pay protocol fees in tokenB as well. * The maximum protocol fee is 0.255%. * Market orders are supported (as are more exotic order types). * Any price improvement is kept by the trader." '' Staking * From this blog (31-7-2019): ''"In Loopring 3.0, LRC plays a big role, and it mostly comes down to staking. Fittingly, there are 3 types of staking in 3.0. The first type of staking is ‘global’, meaning it is protocol-wide. The other two types are ‘local’, or per DEX. 1. Protocol Pool Staking (Global) Anyone can stake LRC to get a part of 70% of the protocol fees of all exchanges. * Who: Anyone * How much: Any amount, user receives an amount proportional to the amount staked, and how long it is staked. * How long: Each token needs to be staked for at least 90 days. Protocol fee pool distribution * 70% to LRC stakers * 20% to the yet-to-launch Loopring DAO * 10% burned Given that protocol fees are calculated and collected on any token as an amount of the token being bought, the ‘mixed bag’ of non-LRC tokens and ETH will be auctioned off for LRC before they are burned or distributed to stakers and our DAO. 2. Exchange Owner Staking (Per Exchange) The exchange owner needs to stake LRC for reputation & extra safety. We will enforce a minimum amount of LRC for creating an exchange and a minimum amount for still being able to commit new blocks. Part of this stake, until the minimum stake amount is reached, can be burned when blocks are reverted (~50,000 LRC) or fines are paid for token distribution. * Who: The exchange owner * How much: ~250,000 LRC minimum for an exchange with data-availability, & ~1,000,000 LRC minimum for an exchange without data-availability. The exchange owner can add to this stake any time they want. * How long: stake is only withdrawable when the exchange is shut down correctly, returning funds safely to users, otherwise it will be slashed. The point of this type of staking is to guarantee the exchange owner has something to lose if he violates the protocol rules. Note, the protocol is non-custodial no matter what — staking simply ensures optimal behaviors, such as speedy processing of requests, and no trade reversions. 3. Exchange Protocol Fee Reduction Staking (Per Exchange) LRC can be staked to lower the protocol fees. Exchange owners need to pay protocol fees for all orders to settle, but both the taker and the maker protocol fees can be lowered. Here are the initial parameter values and how low they can go with staking: Taker: 0.050% -> 0.025% Maker: 0.025% -> 0.0% '' * ''Who: The exchange owner, but the exchange owner will let anyone else stake for this using a custom contract: traders/wallets/market-makers/… * How much: Lowering the taker protocol fee to 0.025%: 2,500,000 LRC; Lowering the maker protocol fee to 0.0%: 1,000,000 LRC * How long: No duration imposed by the protocol, can be done in the exchange’s custom contract. The amount staked by the exchange owner for reputation (see staking #2) is added to the amount staked here for the protocol fee reduction calculation with a 2x factor. We want to incentivize the exchange owner to lock up as much LRC as possible in the exchange to ensure a proper shutdown for its users. This is much more important for exchanges without on-chain data-availability." Staking 'Golden Window' and Founders Staking * From this blog (12-2019): "Loopring Foundation will stake even more LRC in February 2020. But before we do that, we would like to give LRC token holders a chance to stake LRC before us, so they may take advantage to accumulate more points per token. We call the period from now to the end of January the golden staking window. "Starting February 2020, though, the LRC we stake will not come from LEAF, but the allotment of the Loopring team itself. This portion, representing 20% of the total supply, was locked for 2 years — from inception of LRC until September 2019. Two months ago, it began vesting on a monthly schedule, which lasts 2 more years (1/24th vested monthly). However, we have not and will not be withdrawing the vested LRC to sell it — we are locking it further in the v3 staking contracts, a testament to our faith and commitment to the protocol and LRC holders."" Ecosystem Participants * From their whitepaper (8-9-2018) which can be found here. An overview of the network participants: "Wallets: A common wallet service or interface that gives users access to their tokens and a way to send orders to the Loopring network. Wallets will be incentivized to produce orders by sharing fees with ring-miners (see below). With the belief that the future of trading will take place within the safety of individual user’s wallets, connecting these liquidity pools through our protocol is paramount. Consortium Liquidity Sharing Blockchain/RelayMesh: A relay-mesh network for order & liquidity sharing. When nodes run Loopring relay software, they are able to join an existing network and share liquidity with other relays over a consortium blockchain. The consortium blockchain we are building as a first implementation has near real time order sharing (1-2 second blocks), and trims old history to allow for faster download by new nodes. Notably, relays need not join this consortium; they can act alone and not share liquidity with others, or, they can start and manage their own liquidity sharing network. Relays/Ring-Miners: Relays are nodes that receive orders from wallets or the relay-mesh, maintain public order books and trade history, and optionally broadcast orders to other relays (via any arbitrary off-chain medium) and/or relay-mesh nodes. Ring mining is a feature – not a requirement – of relays. It is computationally heavy and is done completely off-chain. We call relays with the ring-mining feature turned on “Ring-Miners”, who produce order-rings by stitching together disparate orders. Relays are free in (1) how they choose to communicate with one another, (2) how they build their order books, and (3) how they mine order-rings (mining algorithms). Asset Tokenization Services (ATS): A bridge between assets that cannot be directly traded on Loopring. They are centralized services run by trustworthy companies or organizations. Users deposit assets (real, fiat or tokens from other chains) and get tokens issued, which can be redeemed for the deposit in the future. Loopring is not a cross-chain exchange protocol (until a suitable solution exists), but ATS enable trading of ERC20 tokens /EIPs /issues /20 [18] with physical assets as well as assets on other blockchains." DEX's on Loopring * First DEX went live (21-12-2019) using Loopring. WeDEX is the first working DEX on the Ethereum mainnet to use zkRollup technology in order to scale. "In their first 8 hrs, they processed 24,461 trades w/ 13,540,468 LRC of volume (2301 ETH) '' ''For context, past 24 hr trade count on Uniswap is 2,517 and 0x 3,471 While not apples to apples (WeDEX incentivizing beta w/ rewards), it nonetheless shows what's possible w/ ZK!" * Dolomite – a leading DEX built on Loopring v2. Dolomite is a place to trade LRC/ETH, ETH/DAI, and more from your own wallet. A portion of fees get turned into LRC and burned. How decentralized is it? * From (9-2019) an AMA: "Loopring is more a “non-custodial centralized exchange protocol”, but we all call it DEX protocol because user asserts are held by the users themselves. In the future, the centralized component, relayer, shall also be decentralized. By then, we will have a more decentralized protocol. As of now, when you look around, all DEXes have centralized components except EtherDelta and the like, but their performance is bad." * According (31-12-2019) to 0x: "I''t is better characterized as a non-custodial exchange. It relies on a centralized operator/process to decide which trades go into the next batch, which is not permissionless, censorship resistant or fault-tolerant."'' * “Loopring does not require members to send tokens to exchanges for custody. Tokens always remain in their blockchain addresses during the whole transaction life cycle Members can even transfer their tokens around after orders are submitted - Loopring will automatically adjust trading amount at the initial price. Loopring protects members from threats such as exchange bankruptcies and DDOS.” * The following comes from a post (29-10-2019) by competitor Komodo (which is the creator of AtomicDEX), so should be read sceptically: "Loopring is not exactly a decentralized exchange. Rather, similar to the 0x project, it’s a modular protocol for building DEXs on multiple blockchains. The Loopring website simply calls it “the protocol for decentralized token exchange.” Using a wallet interface (Metamask, for example) integrated with Loopring, you can create orders and sign them with your private key, which allows the Loopring protocol to withdraw funds at the time of trade execution. In other words, funds aren’t withdrawn until the order is matched, thus you have control of funds even after placing an order. '' ''Relayers host order-books and look for orders to share with other relayers to pool liquidity. Loopring provides a consortium blockchain to enable liquidity sharing but it’s at each relayer’s discretion to use this blockchain, or whether to even share liquidity with other relayers at all. '' ''Loopring enables something called the UniDirectional Order Model, which can match 16 trades at a time, in comparison to single buy/sell order matching like most other exchanges. Loopring calls it “order-ring.” These order-rings get processed by ring-miners through a resource-intensive process called ring-mining. The Loopring protocol incentivizes ring-miners and relayers for network participation. When orders are matched, ring-miners sign the orders and send them to the Loopring protocol for settle transaction settlement. Loopring protocol smart contracts also verify different aspects of this order-ring and settle trades on-chain. Loopring is currently available only for the Ethereum ecosystem, though it can also be implemented on any public blockchain with smart contract support. While this seems like a feature, it can also be a drawback, as it may result in users having to pay a number of gas fees in a number of different currencies just to complete a single trade. This isn’t a flaw with the Loopring protocol as much as it is one of the limitations of smart contract platforms in general but, regardless of where the fault lies, it makes Loopring and other smart contract based DEX protocols somewhat inconvenient and costly." Governance * Is working towards a DAO. "Smart contract updates will (9-2018), in part, be governed by token holders to ensure continuity and safety, and to attenuate the risks of siphoned liquidity through incompatibility. However, LRx token owners are not the only stakeholders to consider in steering the protocol’s direction: relays/ringminers, wallets, developers, and others are an integral part of the ecosystem and their voice must be heard. In fact, given that these agents need not hold any LRx to perform their respective roles (since traditional makers/takers and market-makers are nonexistent, initial token reserves are not mandatory) we must allow alternative methods for their interests to be respected. Furthermore, ”simple” token based voting, both on-chain and off, is an imperfect salve for disagreement, as low voter turnout and token ownership concentration pose risks. Thus, the goal is to implement a governance model that is built in layers, and rests on a shared knowledge that some set of decision-making processes is the norm. This can be facilitated by coordination institutions that offer signals from a diverse set of participants, and, perhaps, from pre-established protocol focal points. As this comes to fruition, the Loopring Foundation will inevitably evolve from protocol developers into protocol stewards." Roadmap From their 2020 roadmap blog (17-12-2019): "Product # Hebao Wallet App (will launch a beta in the first quarter of 2020) # Hebao DEX Protocol # Learn from v3 in Production # Improve Composability # Make Loopring Customizable & Upgradeable # R&D into other ZKP systems Relayer & Backend # Lightcone 3.0 # DEX Browser # Hebao Backend Operations # Volume Goals # LRC Staking" * The roadmap of 2019, which they claim they have full filled can be found here. * From (9-2019) an AMA: "In the long run, we are interested in even decentralize the relayer infrastructure by providing a dual-blockchain DEX solution which we are still researching and may need a lot of words to explain. Not a sidechain though." Code Audit * Had a code audit (20-11-2019) by SECBIT (from China) for V3, which was overall positive. SECBIT had also audited Loopring 2.0’s smart contract code and performed formal verification. KYC * From (9-2019) an AMA: "The option to KYC or not is NOT a Loopring Protocol decision actually. We provide the tech – but an actual DEX product will decide how to run their business in their jurisdiction, and can easily add KYC into it. Or they can choose not to. Completely up them. Dolomite.io, for example, is based in the US, builds atop Loopring, and enforces KYC." Pro's and Cons * From (9-2019) an AMA: "We still have some challenges: '' ''1) we need to dig into ZKP and implementations, right now we use some open-source libs (libsnark, eth snark, etc), '' ''2) we need to find better ZKP curves and may do recursive verifications, '' ''3) we need to reduce the proof generation cost by another magnitude to stay competitive." * What could be considered a con or a pro: "We give DEX owners full control, Loopring doesn’t own any part of a DEX. They need to figure out how to do the bootstrap." Team, investors, partnerships, etc. Team * A team of about 20 people (all most all Asian) on their website (1-2020) * Daniel Wang; Founder and CEO * Jay Zhou; Co-founder, CMO * Brecht Devos; Chief Architect * Steve Guo; CTO * Lightcone Technology Limited. The Loopring Foundation is one of the non-controlling shareholders of Lightcone Technology. Advisors * Johnston Chen; Loopring Co-founder & Former COO, Founder of WeDEX * Xuefeng Li; CTO of Zhongan Technology * Yuhang Guo; Council, China Blockchain Application Research Center * Hongfei Da; Founder of NEO and Ontology * Terence Lam; CEO, Loopnest Blockchain Accelerator * Alex Cheng; CTO of VipKid, Senior VP of Baidu, Director at Google * Yin Cao; Founder, Energy Blockchain Lab * Xiaohu Guo; CS Professor, University of Texas * Yipeng Guo; President, Guangzhou Development Fund Investors * Backed by TokenCapital, ChainFunder, ICO, Racew, Fintech Blockchain Group, NEO Council, QTUM Foundation, Sequio DB * Is listed as one of the investors in Fortuna (as are NEO and QTUM) Partners * Are partnering (9-2019) with WeDEX in China, UpDEX in HongKong, Dolomite in the US, and TokenMarket in EU. * Partner with Nebulas * Part of the WBTC community (still as of 8-2019) * Chainlink and Loopring collaborate on Oracles for zkRollup DEX Protocol (28-12-2019) Category:Coins/Tokens